Noble boosts profit, sees tough times ahead

SAN FRANCISCO (MarketWatch) -- Offshore-drilling rig contractor Noble Corp. reported Wednesday a 23% jump in fourth-quarter profit, but struck a cautionary note on the future given widespread weakness in the global economy and its impact on energy demand.

For the three months ended Dec. 31, Noble's net income rose to $418.6 million, or $1.59 a share, from $347.4 million or $1.29 a share a year ago.

Revenue for the quarter rose to $910 million from $831 million a year earlier.

Analysts polled by FactSet Research had forecast the company would earn $1.10 a share on $917 million in revenue.

Noble ended the year with an order backlog of $11.5 billion. Capital spending for the full year totaled $1.2 billion.

The company said it bought back 2 million shares in the fourth quarter at an average price of $21.60, bringing overall share buybacks for the year to about 8 million.

"While we believe the long-term fundamentals of our industry are sound, the condition of the global economic environment is clearly a cause of concern and a reason for caution," said David Williams, Noble's chairman, president and chief executive, in a statement.

"That said, the strength of our balance sheet, the extent of our contract coverage and the quality of our customer base should position us well to both weather the current economic storm," he added.

The oil-service industry in general has been struggling to cope with a steep drop in oil prices from record highs of $147 a barrel in early July to around $40 a barrel now. As energy prices fall, demand for exploration and development drilling tapers off as well.

Nevertheless, Noble said 79% of its rigs are committed to drilling assignments in 2009, and 40% already have lined up contracts for 2010. Noble has a fleet of 63 offshore-drilling rigs, including five currently under construction.

Shares of Noble
NE, +13.86%
rose 12% to close at $23.30 ahead of the report. The stock is down 49% over the past 12 months, compared with a 53% drop by the Philadelphia Oil Services Index
OSX, +0.91%
over the same period.

Noble is incorporated in the Cayman Islands but maintains its executive offices in Sugar Land, Texas.

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